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Mumbai: THE rupee gained further strength on Wednesday against the dollar on the back of large overseas remittances.

The rupee surged by four and a half paise to end at 47.5600, touching an 18- ½ month high. On Tuesday, the rupee closed at 47.6050/6100.

According to reports, banks in Kerala have been receiving large remittances from the Gulf countries over the past few days. Fearing a fall in the value of the currencies of Gulf States, NRIs are remitting cash at the earliest.

Foreign direct and institutional investors are also said to bringing in money, seeing India as a safe destination for investment.

Comparable levels were last seen on September 13, 2001. Forex dealers said there were large dollar supplies from FIIs and NRIs of close to $200 million.

"The dollar inflows were brought in by foreign banks leading to appreciation in rupee. The currency is expected to remain in the 47.60-47.50 range till the end of the fiscal,'' said Mr Sharukh Wadia, Head-Treasury, IndusInd Bank.

The forwards market saw heavy selling by exporters, leading to a 20 basis points dip in premia.

The six months premium closed at 3.38 per cent (3.60 per cent) and one-year at 3.26 per cent (3.45 per cent).

Call rates rise

Liquidity was still a concern with the inter-bank call rates opening at 7.50 per cent, way above the repo rate of 5 per cent.

Call rates, however, eased to 6.50 per cent levels, following acceptance of all bids in the reverse repo and big lenders offering large amounts in the market. Liquidity is expected to remain on the tighter side in the markets till the year's close, said the chief dealer in a nationalised bank.

However, April should see close to Rs 30,000 crore entering into the system through the Government's spending, salary payments, coupon redemptions and payments, thereby improving liquidity conditions. The central bank injected funds worth Rs 5,540 crore at 7 per cent through the reverse repo route to improve the liquidity conditions in the market and rejected the single bid for repo worth Rs 350 crore.

G-secs prices went up by 25-30 paise intra-day on thin volumes, while comparing opening and closing levels. The ten-year benchmark 9.81 per cent opened and closed at Rs 125.70 with a yield of 6.35 per cent after touching an intra-day high of Rs 125.85/90. Traders were seen buying, expecting a rally in April, while some private and nationalised banks were selling to meet their profit targets.

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